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Telkom to head to court over spectrum auction

The parastatal said while it had secured some spectrum, it was inhibited in bidding the quantity of spectrum it wanted. Picture: Thobile Mathonsi.

The parastatal said while it had secured some spectrum, it was inhibited in bidding the quantity of spectrum it wanted. Picture: Thobile Mathonsi.

Published Mar 29, 2022

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Telkom said on Monday that it would go ahead with legal action against the Independent Communications Authority of South Africa (Icasa) over the communication regulator’s spectrum auction.

The parastatal said while it had secured some spectrum, it was inhibited in bidding the quantity of spectrum it wanted.

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“While Telkom has been able to secure the much-needed sub-1 GHz in the spectrum auction, we were constrained in our ability to acquire the amount of spectrum that we need to compete effectively,” Telkom said.

In January, Telkom took Icasa to court to block the authority from processing the invitations to apply (ITAs) for the high-demand spectrum. Telkom’s hearing would be heard from April 11 to 14. It said the outcome may impact the auction and its outcome.

Icasa concluded the spectrum auction on March 17, 2022, with South Africa’s mobile network operators pledging R14.4 billion to acquire new radio frequency spectrum.

In the auction, Telkom agreed to pay R2.1 billion for 20MHz of the 800MHz band, the first time it had secured mobile spectrum below 1GHz – as well as 22MHz of the 3.5GHz band.

Telkom said Icasa confirmed that the auction fee was due within 30 working days. The auction fee due is the full amount relating to 3500MHz and the proportional payment for 800MHz that is immediately available.

Telkom told its shareholders that the payment of R1.1 billion was expected to be made in the current financial year, impacting the year’s debt level, capex spend, and free cash flow (FCF).

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“Telkom’s year-to-date FCF is in negative territory, tracking below its expectations. Notwithstanding the financial impact, Telkom has adequate capacity on its balance sheet to fund the spectrum while maintaining sufficient headroom of its loan covenants,” the mobile operator said.

The long-term strategic benefits of the spectrum acquisition outweighed the short-term financial impact, Telkom said.

“Since inception, Telkom Mobile has not owned sub 1 GHz spectrum. The 20MHz of 800MHz, once available, will enable more efficient network deployment, increased coverage, and capacity for the mobility layer (FDD), resulting in improved user throughput and experience, particularly in rural areas.”

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Telkom said it already provides a Fixed Wireless Access service.

“The acquisition of 22MHz of 3500MHz will enable us to advance an enhanced 5G position by combining our existing 28MHz of 3500MHz to achieve a total of 50MHz contiguous spectrum in this band,” it said.

Mobile operators for years have been fighting for the release of additional spectrum, saying that it would allow them to increase coverage, improve services, and cut prices.

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